SPIL halts equipment purchases

SPENDING LARGE: The purchase of new equipment this year by semiconductor firms is expected to more than double from last year, but will grow by only 4.9% next year


Tue, Sep 14, 2010 - Page 12

Siliconware Precision Industries Co Ltd (SPIL, 矽品精密), the world’s No. 2 chip packager, yesterday said it was suspending the purchase of new, advanced equipment as customer demand has started to slacken recently.

Earlier this year, a strong recovery in electronics as the global economy began to improve prompted most local chip companies, including SPIL, to hike proposed capital spending for this year to record highs as they ­struggled to meet customer demand.

“We have put on hold the purchase of copper wire bonders,” company spokesman Byron Chiang (江百宏) said on the phone. “Orders are not coming along as strong as we originally thought.”

About NT$1.6 billion (US$50.24 million) of orders for equipment makers would be affected, Chiang said.

The figure accounts for about 7.6 percent of the overall NT$21 billion spending budgeted by the chip testing and packaging ­service ­provider this year on the ­expectations that emerging markets would greatly drive demand.

Last year, the Taichung-based company only spent NT$4.74 billion on new facilities and equipment.

SPIL has not set a new timetable for equipment purchasing yet.

“We are keeping our capital spending flexible,” Chiang said.

Rival Advanced Semiconductor Engineering Inc (ASE, 日月光半導體) is also considering canceling or postponing some orders for new equipment, the Chinese-language newspaper Economic Daily News reported yesterday.

ASE was not available for comment yesterday. The world’s biggest chip packager has budgeted a record high US$700 million for spending on new equipment for this year, up nearly 80 percent from last year’s US$390 million.

Worldwide semiconductor capital equipment spending is projected to approach US$36.9 billion this year, an increase of 1.22 times from last year’s US$16.6 billion, according to a report by marktet research firm Gartner Inc yesterday.

Next year, semiconductor capital equipment spending will grow 4.9 percent to US$38.7 billion, the report said.

“Companies should also ­prepare business plans for the next equipment downcycle, starting in late 2012, because memory companies will have over-invested, thus generating excess equipment,” Klaus Rinnen, a Gartner managing vice president, said in the report.

The packaging and assembly equipment segment will increase more than 123 percent this year to US$6.05 billion and rise further to US$6.42 billion, according to Gartner’s forecast.

Shares of SPIL and ASE rose 1.31 percent and 1.08 percent to NT$30.85 and NT$23.5 respectively, underperforming the benchmark TAIEX, which rose 2.55 percent yesterday.